Friday, March 22, 2013

As H.G. Wells said, “all progress is
made by unreasonable men.” Of course, he was wrong. There are many unreasonable
women! Each year, in the USA alone, there are over 100,000 start-ups. Only about
10,000 get any outside funding at all and only about 1,000 get VC funding. The
biggest VCs only fund low single digits per year, and the small ones may only
fund any every other year or less often. Even of those funded by VCs, about 50
will become real businesses, and probably fewer than 5 will pay back the
investment in the multiples they hope for. So, almost all founders waste years
on the business and lose a lot of money. A very few make a fortune, a few more
make a living.

Nevertheless, were it not for such
people, the country would not progress and grow. Fortune 500 companies, in
aggregate, are job destroyers. It is the medium sized and small companies that
grow employment and advance technology available to the market. Even the best
corporate labs have only a small proportion of the technology they generate
commercialized. So the country, and the world, needs start-ups to sustain our
growing population, even at the cost of dashed dreams and bankrupt
entrepreneurs. But why do intelligent people found businesses if the ods are so
intimidating?

Perhaps, it is, as they say about
lottery tickets, “you can’t win unless you buy a ticket.” That is probably one
of the reasons, but there are others. Firstly, most founders do not know how
slim the chances of success are. Secondly, they have an idea that they totally
and passionately believe in. They usually over-estimate the quality of the
idea, but it is still normally a good idea. Thirdly, they assume that both
selling and getting investors will be easier than it is (after all, it is
self-evidently, a brilliant idea).

As a result of this, founders can be
unreasonable managers and partners. They are so convinced of the rightness of
the idea that they do not accept anything that is at odds with their own vision.
Now there are founders who are very different, but a balance is important.
There are ten key guidelines that can make the success of a start up more
likely. These are:

1.A team of equals is more likely to succeed than
a single founder. There is a lot of work to do and rarely can one person alone
do it all. Furthermore, it shows that the founder(s) can work with other
people, and the idea is good enough to get several people believing in it
enough to put their lives on the line.

2.Having a defined target market. If the business
cannot narrowly define its market, it cannot optimize its product, its message,
its pricing and its distribution channels.

3.Solving a recognized problem in a new way. If
the target market does not and never does, recognize a problem, then however
technically brilliant the product or service, it cannot succeed.

4.Openness to new input. Often founders are so
monomaniacal that they keep on with a plan even when they get new input or
experience problems. While constantly changing is harmful, openness to change
is essential.

5.Too much focus on product vs. acquisition of
customers. Getting customers is key, as a source of revenue, but also it
enables easier funding and continuous product improvement. Paying customers
give better product feedback than ones that are trying it for free. Balance
spending against sales and marketing with spending on programmers.

6.Having too little money. It takes a lot of time
to get funding, and if the founder does not get 12-18 months of money, then the
he or she can spend all of his or her time chasing money.

7.Spending too much money on the wrong things.
Fancy offices do not matter, people can work from home if needed, as long as
there are people who can make or deliver the product and people working on
sales and marketing.

8.Choose the right location. Not all locations are
created equal. Too many founders pick a location because they live there, or
want to. Just because it’s a big city, it may still be wrong – Chicago or
Dallas is almost always a mistake for a start up in technology or fashion. You
need a culture that is start up friendly and that has an infrastructure to
support you. For example, investors would rather invest locally than have to
get on a plane to attend a board meeting.

9.Make all your early people feel like founders.
They will have a stake in the success of the business rather than just being
employees there for a salary.

10.Make
sure that you and all on the team make this a serious, energetic effort. You
can’t play with a start up on the side and expect that it will work. Too many
people are dilettantes for years and even if it is a good idea, they drift for
so long that they fail, still having spent lots of money and time.

So, if you have an idea, go for it. Recognize that it is
hard, but the potential rewards are great. Do all that you need to do to
maximize your chances of success, and balance some insanity with intelligence.

Followers

About Me

Richard has grown multiple businesses, some from scratch, some already establishes, to much bigger profit and market value.

Richard has over
thirty years in leading Fortune 500 and much smaller companies to
success as a member of top management in Fortune 500 companies and adviser to
them as consultant and Board member.

Prior to
founding Max Brand Equity, Richard started his career in marketing at Procter
& Gamble, later becoming a Division Head at Mars, Inc, CMO at US West and BMC
Software as well as President of Reliant Energy. He was also a partner in two
respected consulting firms, where he advised top management of Global 2000
companies. He has been on the Board of eight highly successful companies,
including four start-ups.

Richard has
focused on initiating and leading change to achieve successful results in
global organizations in changing markets. From Consumer Packaged goods to
communications and high-tech he has created new paradigms which have changed
the market structure and built substantial revenue and profit growth.

Most recently,
Richard created the consumer “broadband” market while at US West/Comcast, the
most successful retail energy business at Reliant Energy, new “dialog-based” CRM approaches at several companies as well as BMC software, as well as pioneering in
multi-channel and direct to the consumer marketing. He grew market value of
three public corporations by several-fold in periods of around two years each.
The firm focuses on excellence in execution - Big Idea to Successful Implementation
in Seven Steps

Richard has
focused on initiating and leading change to achieve successful results in
global organizations in changing markets. From Consumer Packaged goods to
communications and high-tech he has created new paradigms which have changed
the market structure and built substantial revenue and profit growth.

Richard has
grown and led several large global organizations. Much of the success of the
organizations was built on his definition of tasks and responsibilities as well
as structure and communications. He has lived and worked in ten countries and
four continents, achieving great success in multiple markets.

He has regularly
achieved success for many companies, in multiple categories, both as a manager
and as a consultant. He is an acknowledged expert, having been a published
author and public speaker over many years, and is sought out as an interviewee
in many areas.

Richard
graduated from the University of Cambridge with a
Bachelors degree in Chemistry, Physics, and Math. He went on to earn a Masters from Cambridge
in Chemical Engineering.